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CHICAGO — Struggling cellphone maker Motorola (MOT) said Thursday that its first-quarter loss widened as sales in the company's handset unit fell 39%, extending a two-year slump.

The results come as Motorola is in the midst of an upheaval, announcing plans earlier this spring to split itself into two publicly traded companies as it struggles to revive its cellphone unit. The company has a new chairman and a new chief executive and has seen a fleet of senior executives leave in recent months.

The suburban Chicago company said it lost $194 million, or 9 cents a share, in the quarter ended March 31. That's worse than the company's year-ago loss of $181 million, or 8 cents a share.

Sales fell about 21% to $7.45 billion, from $9.43 billion a year ago.

The worse-than-expected performance fell short of Wall Street expectations.

Analysts surveyed by Thomson Financial predicted a loss of 7 cents a share on sales of $7.75 billion.

For the second quarter, Schaumburg-based Motorola said it expects to lose 2 to 4 cents a share from continuing operations. Analysts expected a loss of 1 cent.

"During the first quarter, we made an important strategic decision to separate the company, creating two independent, publicly traded entities," said Greg Brown, who became Motorola's president and chief executive in January.

Motorola said Thursday that its cellphone unit lost $418 million during the quarter, nearly 80% more than the $233 million it lost during the same period last year. Meanwhile, the company's home and networks mobility division, which sells TV set-top boxes and modems, saw its operating profit shrink 8% to $153 million.

The only bright spot in the company's financial performance continued to be its enterprise mobility solutions division, which sells computing and communications equipment to businesses. That unit saw its operating profits grow 9%.

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Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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